EUR/USD opened in Asia around 1.3095 after breaking lower on sustained EUR/JPY selling. EUR/USD eased to 1.3081 in early Asia when the EUR/JPY fell to 150.74, but this was followed by a reversal higher in the EUR/JPY up to 152.86 when Japanese investors bought aggressively. Into Europe and EUR/USD traded up to 1.3130 before a small wave of EUR/GBP selling knocked the cross from 0.6812-14 to 0.6800.
EUR/USD steadied between 1.3105/15 for the balance of the European morning session. The slightly softer bias helped by poor EZ retail sales data for January. EUR sentiment is mixed ahead of the ECB meeting Thursday. Some analysts feel that the EUR might suffer on concerns over global growth, as the hawkish ECB has not established credentials in promoting growth.
This could explain why the EUR has lost ground despite lower US yields. The recovery in the EUR/JPY has helped to underpin the EUR, but the big test will be the market's reaction to the ECB meeting. The consensus is that the ECB will hike, but some warn that if global markets are still wobbly it might make their decision a difficult one.
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